AILSA CHANG, HOST:
Wall Street analysts are calling today their Super Bowl. The chip company Nvidia reported blockbuster earnings this afternoon, but that big win fell flat. Its stock fell in after-hours trading, and here to explain more is NPR finance correspondent Maria Aspan. Hi, Maria.
MARIA ASPAN, BYLINE: Hey, Ailsa.
CHANG: Hey. OK, so Wall Street has been waiting all week for the closing bell for Nvidia to release this report. How did it do, exactly?
ASPAN: Look, it did really well. Nvidia reported sales of $30 billion in just...
CHANG: Wow.
ASPAN: ...The last three months.
CHANG: Wow.
ASPAN: That is more than double its revenues from a year earlier, and it's better than what analysts were expecting. But look, the hype was intense, and, in some ways, Nvidia was just never going to live up to it. There are a few things going on here. First of all, Nvidia has been just such a crazy market success story. There was one point in June when its stock price rose so high that it became the most valuable company in the world, overtaking Microsoft and Apple.
CHANG: Right.
ASPAN: But it's not a Microsoft or an Apple. Those companies do hundreds of billions of dollars a year in sales, not tens. And if you look at Nvidia sales, it's still kind of a tiny company in comparison, and that's where you start to see why this might be a little bit more hype than reality.
CHANG: Right. I mean, Nvidia also is not exactly a household name. It has this weird spelling. The company is still teaching people how to pronounce its name. But just remind us why everyone is paying so much attention to this company.
ASPAN: It is all about the AI gold rush. All of the big tech companies, those household names - Microsoft, Facebook, Amazon, Google - they're all going after AI, and they're spending billions of dollars or tens of billions of dollars each to do so. And if AI is the latest gold rush, Nvidia is the one selling companies the picks and the shovels to go get that gold. I have to say, I'm stealing that metaphor from analyst Andy Li at CreditSights. He told me that as long as big companies like the Microsofts and Googles are trying to what he calls hyperscale their AI investments, Nvidia is going to be at the center of the action.
ANDY LI: In some respects, they are really the only game in town, and as long as the appetite from kind of, like, the big hyperscalers - as long as the appetite to invest continues, then, you know, the vast majority of that benefit is going to flow to Nvidia.
ASPAN: And Li also told me that the frenzy around Nvidia isn't just about its business, as good as that is. It's also about the stock market overall.
CHANG: Yeah, let's talk about the stock market overall. Why does Wall Street care so much about Nvidia?
ASPAN: This is a larger story. It's not just about what is frankly still a B2B equipment maker at its core. I mean, tech is the foundation of the market right now, and Nvidia is the one undergirding these big tech companies. So it would be bad for everyone, not just Nvidia, if the market tanks. And it's also important to point out, tech has been this bright spot for investors and, frankly, for all of us, amid all of this other uncertainty. You know, we're waiting for the Fed to lower interest rates. We're still feeling the effects of inflation. We're going into a very contentious presidential election. And amid all of that, tech, and especially AI, seems like this huge, happy extravaganza. In other words, it really is kind of like the Super Bowl.
CHANG: Maybe. That is NPR's Maria Aspan. Thank you so much, Maria.
ASPAN: Thanks so much, Ailsa. Transcript provided by NPR, Copyright NPR.
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